ITC OF PLYWOOD AND HARDWARE ITEMS

[RAHUL GAIKWAD]

My Client is Furniture Manufacturer and He is also manufacturing furniture for Banks according to Bank design and demand. In such case he purchases various item i.e plywood, laminates, hardware item for manufacturing of Furniture which is moveable or immovable. Then ITC is admissible for My Client.?

[KASTURI SETHI]

It is clearly a situation of works contract service. All the items are meant for immovable property. Though some items are moveable, yet its ultimate use is for immovable property. ITC is not admissible.

[KASTURI SETHI]

Also go through the replies against Issue ID 114978 dated 17.5.2019. Reply posted by Sh.Sharad Anada Ji is comprehensive and worth reading. This reply can help you in arriving at correct decision.

[RAHUL GAIKWAD]

90% he makes table and sofas which are moveable in nature.? Then.?

[SHARAD ANADA]

Furniture manufacturer is eligible for ITC on input and input services. He is using this input and input services for manufacturing of furniture. Furniture is goods for them. Or we can say he his providing works contract services. When supplier is using input and input services for providing taxable output supply then he is eligible for ITC.

But from recipient point of view it may be movable or immovable. If it's immovable for recipient then GST charged by furniture manufacturer is blocked credit for him under sec 17(5) of CGST Act 2017.

For eg. A contractor is providing commercial building construction services by using input and input services in that case he is eligible for ITC. But from recipient point of view it's immovable porpery and recipient is not eligible for ITC charged by contractor.

[RAHUL GAIKWAD]

Ok

Means contractor is eligible for ITC....

[SHARAD ANADA]

In my view Yes

[RAHUL GAIKWAD]

ohk...

[KASTURI SETHI]

Dear Querist,. AAR, Rajasthan in the case of Applicant , namely, Rambagh Palace Hotels Pvt. Ltd. Has decided your issue in favour of the party'. Every issue and reply is worth reading. All your confusions are cleared in this decision. Reported as 2019 (24) GSTL. 691 (AAR-GST) =2019 (5) TMI 248 - AUTHORITY FOR ADVANCE RULING - RAJASTHAN. Although this decision is specifically meant for the applicant, yet you can get legal support and on this very basis you can also go for Advance Ruling.

AI Summary

Input tax credit for furniture depends on whether the supply is movable goods or a works contract, affecting credit availability. A furniture manufacturer may claim input tax credit on inputs and input services used to manufacture movable furniture. If the supply is effectively a works contract or results in immovable property for the recipient, inputs used for immovable property do not qualify for ITC and GST charged by the supplier is a blocked credit for the recipient under section 17(5) of the CGST Act, 2017. An AAR decision from Rajasthan on similar facts is cited as supportive authority.